Hurd Sees HP, VARs As Team Players

Mark Hurd, in an exclusive interview,

“We look at the channel as a strategic advantage and not a strategic problem,” Hurd said last week, adding that his intention is to quiet the debate over direct vs. indirect sales and mold the Palo Alto, Calif.-based vendor and its channel into a single team.

“I look at the majority of our partners as a very direct extension of Hewlett-Packard,” he said. “Compensation isn’t the No. 1 thing that drives our employees. You’ve got to show up with winning products; you’ve got to show up with a winning environment where partners feel like they can go to the marketplace and win.”

Hurd cited HP’s new Attach Plus channel program and a revamped sales organization that includes plans to more closely align with partners in the coming year.

“If you are a partner and you believe in what we can do to help the partner in the market and even the aggregate value proposition, if you believe in our support structure and our people, the compensation plan in the end should just be a supporter of that mission,” Hurd said. “And that’s what we are trying to do. We’re trying to put our money where our mouth is.”

HP’s solution providers said they welcome Hurd’s plan to turn his attention to the channel after spending his first year on the job focused internally. “He’s re-energized HP employees,” said Tim Joyce, president and CEO of Roundstone Systems, an exclusive HP solution provider in Alameda, Calif. “He’s taken a very good company and made it better. For the past year, he had a lot of problems to fix, but the channel really wasn’t one of them; it’s not well-tuned, but it’s not really a problem. He’s spent his time fixing internal issues. Now he gets a chance to look at the engine that drives the sales.”

In the past year, Hurd has recast HP as a leaner organization, trimming its workforce by more than 15,000 employees worldwide and eliminating the umbrella Customer Solutions Group sales organization, instead making each of HP’s business units responsible for its own sales and marketing. During his tenure, HP also has reined in its Colorado Springs, Colo.-based direct-marketing call-center, which solution providers say often tried to convert accounts long-served by partners into HP direct accounts.

But the impact of those moves has had a mixed impact on partners, most notably the workforce reductions that partners say translates into fewer HP sales people working with partners. “HP is, by far, hands down, the worst manufacturer in terms of having feet on the street,” said John DeRocker, senior vice president of sales and marketing at Nexus Information Systems, a solution provider in Plymouth, Minn., with annual revenue close to $30 million. DeRocker said he feels the lack of support most acutely in the crucial storage market. “I haven’t seen an HP storage person in years, and I haven’t seen an HP storage person that owns a quota, meaning that they have to partner with a solution provider to hit their numbers,” he said. “It’s all put on the partners’ shoulders, and they are the only vendor that does that.”

Hurd acknowledged the problem and vowed to fix it. “I agree with that view that we have too few people out in the marketplace with a Hewlett-Packard badge creating demand for HP products, and we are going to fix that; we’re investing in salespeople today,” he said. “That said, I don’t want the message to be perceived that we’re trying to eliminate the channel as we put people out there. That’s not the message at all. We’re trying to create more demand for HP. … The partners that are really in the war with us, this should be great news for them.”

Solution providers noted that better alignment between solution providers and HP’s sales force is even more important now that the CSG sales organization is gone. “It used to be that I could take one [HP] partner manager into an account, and he could talk across all platforms,” said Pete Busam, vice president and COO of Decisive Business Systems, a $9 million Pennsauken, N.J.-based solution provider that counts close to half of its business from HP. “Now, I have to go to four different people [from each of the HP business units] to get four different [prices]. But at the end of the day, they are so thin in the background that they don’t have the resources to do things. You are asking me to be the point man for all HP products to a customer because you don’t have a single point man out in the SMB market,” he said.

Hurd also talked about attach rate issues. Beginning next week, HP's new Attach Plus rebate will reward partners for attaching more HP content to a single solution. “Our objective is to say, ‘We think we’ve got great products, and we want to put incentives for aligning those products together to put a better configuration … in front of the end customer,” Hurd said. However, he noted, “We have problems when we have partners that attach some aspects of foreign peripherals to our products that cause support and image problems and brand problems downstream.”

He cited, for example, non-HP ink sold with HP printers. He said that HP printers see much higher failure rates with non-HP ink. “When a non-HP ink breaks in a printer, most people don’t say, ‘Oh, darn that non-HP ink,’ ” he said. “They typically say, ‘Darn that HP printer, it doesn’t work.’ ”

Still, in encouraging greater HP attach rates to both protect the brand and increase HP revenue, Hurd said he is not seeking to align only with partners that are HP-exclusive. “We think it’s easier if you’re 100 percent dedicated to HP, but the world isn’t 100 percent HP,” he said. “We’d like it to be, but I think it’s not an objective for my tenure. We have to deal with a world that’s mixed, but partners have to decide.”

However, partners that have chosen to be HP-exclusive say Hurd needs to work hard to more tangibly reward their commitment. “I’ve chosen, for good or for bad, to be an exclusive HP partner,” said Roundstone’s Joyce. “I believe intuitively that being HP-exclusive should have some real value, and I look forward to getting a clearer answer to that question.”